If you are considering filing bankruptcy, you may wonder what happens to your real estate in bankruptcy? The answer depends on the type of bankruptcy you file and the amount of equity in the property. If you have any equity in your home, it is highly recommended that you work with a bankruptcy attorney to protect your assets and avoid forfeiture by the trustee or creditors. Contact De Novo Law Firm with any bankruptcy questions at (951) 801-5570.
Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, your assets are liquidated to pay off your creditors. When filing for chapter 7 bankruptcy, most people can keep their home, assuming there is not much equity in the home. However, if there is a large amount of equity in the home that could be paid to creditors, it is likely that the trustee may claim the asset for the benefit of creditors. The amount of equity will vary depending on your individual circumstance including age and household size.
Chapter 7 bankruptcy does not cure any delinquent payments on your home. You should also be up-to-date on your home payments if you intend to keep the property. If you fail to make payments, creditors can still foreclose on the property after you exit bankruptcy.
Chapter 13 Bankruptcy Filing
A chapter 13 bankruptcy is a reorganization form of bankruptcy. Chapter 13 allows you to keep your house, but requires debtors to make monthly payments to creditors and takes longer for the process to go through.
If you own a house but are not current with your payments, Chapter 13 is the obvious choice for filing bankruptcy as it gives you time to catch up on payments you have missed.